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Imperial China granted the concessions during the latter Qing Dynasty period (1644–1911), as a result of the series of "Unequal Treaties". They began in 1842's Treaty of Nanjing with the United Kingdom. Under each treaty, China was usually obligated to open more treaty ports for trade and lease out more territory as part of the concession or surrender it completely. The one exception that preceded this period was Macau, which had been leased in 1557 to the Kingdom of Portugal, during the Ming Dynasty (1368–1644); Portugal continued to pay rent up to 1863 to stay in Macau.[1]

In these concessions, the citizens of each foreign power were given the right to freely inhabit, trade, do missionary reductions, and travel. They developed their own sub-cultures, isolated and distinct from the intrinsic Chinese culture, and colonial administrations attempted to give their concessions "homeland" qualities. Churches, public houses, and various other western commercial institutions sprang up in the concessions. In the case of Japan, its own traditions and language naturally flourished. Some of these concessions eventually had a more advanced architecture of each originating culture than most cities back in the countries of the origin of the foreign powers.

Chinese were originally forbidden from most of the concessions, but to improve commercial activity and services, by the 1860s most concessions permitted Chinese, but treated them like second-class citizens as they were not citizens of the foreign state administering the concession. They eventually became the majority of the residents inside the concessions. Non-Chinese in the concessions were generally subject to consular law, and some of these laws applied to the Chinese residents.

Each concession also had its own police force and different legal jurisdictions with their own separate laws. Thus, an activity might be legal in one concession but illegal in another.
Many of the concessions also maintained their own military garrison and a standing army. Military and police forces of the Chinese government were sometimes present. Some police forces allowed Chinese, others did not.

The Hong Kong and Shanghai Bank, built in 1923 and The Customs House, built in 1927, Shanghai

The foreign concessions continued in the mainland Republic of China (1912–1949) period. In major cities like Shanghai and Tianjin, because there were so many jurisdictions, criminals could commit a crime in one jurisdiction and then easily escape to another. This became a major problem during the Republic of China period, with the rise of post–Imperial Warlord era and the collapse of central authority in the 1920s–30s. Crime often flourished, especially organized crime by different warlord groups.

Some efforts were made by the foreign powers to have the different police forces cooperate and work together, but not with significant success. The image of gangsters and Triad societies connected with the major cities and concessions of the period is often due to extraterritoriality within the cities.

At the start of the Second Sino-Japanese War (1937–1945), the standing army in the Japanese concessions would be used against the mainland Republic of China and Chinese forces.

^Joseph Timothy Haydn (1885). Dictionary of dates, and universal reference. [With] (18 ed.). Oxford University. p. 522. MACAO (in Quang-tong, S. China) was given to the Portuguese as a commercial station in 1586 (in return for their assistance against pirates), subject to an annual tribute, which was remitted in 1863. Here Camoens composed part of the "Lusiad."